Microsoft has uncovered stealthy and targeted malicious activity focused on post-compromise credential access and network system discovery aimed at critical infrastructure organizations in the United States.

The attack is carried out by Volt Typhoon, a state-sponsored actor based in China that typically focuses on espionage and information gathering.

Volt Typhoon attack diagram

Volt Typhoon achieves initial access to targeted organizations through internet-facing Fortinet FortiGuard devices. The threat actor attempts to leverage any privileges afforded by the Fortinet device, extracts credentials to an Active Directory account used by the device and then attempts to authenticate to other devices on the network with those credentials.

Volt Typhoon proxies all its network traffic to its targets through compromised SOHO network edge devices (including routers). Microsoft has confirmed that many of the devices, which include those manufactured by ASUS, Cisco, D-Link, NETGEAR, and Zyxel, allow the owner to expose HTTP or SSH management interfaces to the internet.

By proxying through these devices, Volt Typhoon enhances the stealth of its operations and lowers overhead costs for acquiring infrastructure.

Once Volt Typhoon gains access to a target environment, they begin conducting hands-on-keyboard activity via the command line. Some of these commands appear to be exploratory or experimental, as the operators adjust and repeat them multiple times.

Credential access

If the account that Volt Typhoon compromised from the Fortinet device has privileged access, they use that account to perform the following credential access activities.

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Microsoft has observed Volt Typhoon attempting to dump credentials through the Local Security Authority Subsystem Service (LSASS). The LSASS process memory space contains hashes for the current user’s operating system (OS) credentials.

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Figure 2. Volt Typhoon command to dump LSASS process memory, encoded in Base64
Figure 3. Decoded Base64 of Volt Typhoon command to dump LSASS process memory

Volt Typhoon also frequently attempts to use the command-line tool Ntdsutil.exe to create installation media from domain controllers, either remotely or locally. These media are intended to be used in the installation of new domain controllers. The files in the installation media contain usernames and password hashes that the threat actors can crack offline, giving them valid domain account credentials that they could use to regain access to a compromised organization if they lose access.

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Figure 4. Volt Typhoon command to remotely create domain controller installation media

Microsoft has observed Volt Typhoon discovering system information, including file system types; drive names, size, and free space; running processes; and open networks. They also attempt to discover other systems on the compromised network using PowerShell, Windows Management Instrumentation Command-line (WMIC), and the ping command. In a small number of cases, the threat actors run system checks to determine if they are operating within a virtualized environment.

In addition to operating system and domain credentials, Volt Typhoon dumps information from local web browser applications. Microsoft has also observed the threat actors staging collected data in password-protected archives.

Command and control

In most cases, Volt Typhoon accesses compromised systems by signing in with valid credentials, the same way authorized users do. However, in a small number of cases, Microsoft has observed Volt Typhoon operators creating proxies on compromised systems to facilitate access. They accomplish this with the built-in netsh portproxy command.

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Figure 6. Volt Typhoon commands creating and later deleting a port proxy on a compromised system

In rare cases, they also use custom versions of open-source tools Impacket and Fast Reverse Proxy (FRP) to establish a C2 channel over proxy.

Compromised organizations will observe C2 access in the form of successful sign-ins from unusual IP addresses. The same user account used for these sign-ins may be linked to command-line activity conducting further credential access. Microsoft will continue to monitor Volt Typhoon and track changes in their activity and tooling.

Mitigation and protection guidance

Mitigating risk from adversaries like Volt Typhoon that rely on valid accounts and living-off-the-land binaries (LOLBins) is particularly challenging. Detecting activity that uses normal sign-in channels and system binaries requires behavioral monitoring. Remediation requires closing or changing credentials for compromised accounts.

What to do now if you’re affected

  • Close or change credentials for all compromised accounts. Depending on the level of collection activity, many accounts may be affected. Identify LSASS dumping and domain controller installation media creation to identify affected accounts.
  • Examine the activity of compromised accounts for any malicious actions or exposed data.

Defending against this campaign

  • Mitigate the risk of compromised valid accounts by enforcing strong multi-factor authentication (MFA) policies using hardware security keys or Microsoft Authenticator. Passwordless sign-in, password expiration rules, and deactivating unused accounts can also help mitigate risk from this access method.
  • Reduce the attack surface. Microsoft customers can turn on the following attack surface reduction rules to block or audit some observed activity associated with this threat:
    • Block credential stealing from the Windows local security authority subsystem (lsass.exe).Block process creations originating from PSExec and WMI commands. Some organizations may experience compatibility issues with this rule on certain server systems but should deploy it to other systems to prevent lateral movement originating from PsExec and WMI.
    • Block execution of potentially obfuscated scripts.
  • Harden the LSASS process by enabling Protective Process Light (PPL) for LSASS on Windows 11 devices. New, enterprise-joined Windows 11 (22H2 update) installs have this feature enabled by default. In addition, enable Windows Defender Credential Guard, which is also turned on by default for organizations using the Enterprise edition of Windows 11.
  • Turn on cloud-delivered protection in Microsoft Defender Antivirus to cover rapidly evolving attacker tools, techniques, and behaviors such as those exhibited by Volt Typhoon.
  • Run endpoint detection and response (EDR) in block mode so that Microsoft Defender for Endpoint can block malicious artifacts, even when your non-Microsoft antivirus does not detect the threat, or when Microsoft Defender Antivirus is running in passive mode. EDR in block mode works behind the scenes to remediate malicious artifacts that are detected post-compromise.
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